The new bill would increase the thresholds at which the previously proposed rates would apply. As in the prior bill, the new bill would also extend the 7% withholding tax to dividends from profits accrued in tax years beginning 1 January 2021 and thereafter.
On 7 April 2021, the Argentine Executive Power circulated an updated version of the bill that it plans to send to Congress that would increase corporate income tax rates for tax years beginning 1 January 2021 and onwards. The previous version of the bill was circulated on 11 March 2021 (see EY Global Tax Alert, Argentine Government plans to send bill to Congress that would raise corporate income tax rates, dated 16 March 2021).
Characteristics of the bill
Like the prior version, the new bill would replace the 25% fixed tax rate currently in effect with a progressive tax scale. The new bill, however, would increase the thresholds at which the new rates would apply. For tax years beginning 1 January 2021, the following ranges would apply:
- For accumulated net taxable income up to ARS5,000,000 (approx. US$55,500): 25% tax rate on net taxable income
- For accumulated net taxable income from ARS 5,000,001 to ARS20,000,000 (approx. US$222,200): ARS1,250,000 (approx. US$13,800) plus a 30% tax rate on accumulated net taxable income exceeding ARS5,000,000
- For accumulated net taxable income exceeding ARS20,000,000 (approx. US$222,200): ARS5,750,000 (approx. US$63,800) plus a 35% tax rate on accumulated net taxable income exceeding ARS20,000,000
The new tax rates also would apply to permanent establishments in Argentina as defined by the income tax law.
The new bill also would allow the ranges of net taxable income to be adjusted annually beginning 1 January 2022, considering the annual variation as of October of the previous year of the consumer price index (IPC for the Spanish acronym) provided by the National Statistics and Census Institute (INDEC), an agency of the Ministry of Economy.
As in the prior bill, the new bill would permanently extend the 7% withholding tax rate currently in force for dividend distributions from profits accrued in tax years beginning 1 January 2021 and onwards.
For additional information with respect to this Alert, please contact the following:
Pistrelli, Henry Martin & Asociados S.R.L., Buenos Aires
Carlos Casanovas
Gustavo Scravaglieri
Ariel Becher
Pablo Baroffio
Juan Ignacio Pernin
Ernst & Young LLP (United States), Latin American Business Center, New York
Pablo Wejcman
Agustina Paula Paradiso
Ana Mingramm
Enrique Perez Grovas
Ernst & Young Abogados, Latin American Business Center, Madrid
Jaime Vargas
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Lourdes Libreros
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
Raul Moreno, Tokyo
Luis Coronado, Singapore
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
